Monday, May 30, 2011

The Crux Of The Matter

Robert Samuelson has a typically excellent piece on the European debt crisis. In it is this nugget that you find over and over again in such pieces.

Europe is playing for time. It's struggling to delay any Greek default long enough for other vulnerable countries to demonstrate they can handle their debts.

Here's where it seems relatively simple to me, but isn't addressed in 99.99% of the pieces I read on the topic. There are two questions to ask, ones that are independent of scale. That is, they can be asked of your 10-year-old daughter, a corporate CEO or the head of a country.

What are you going to do that people will be willing to pay for?

How will you service your debts?

If you can't answer them satisfactorily, you're hosed and playing for time isn't going to do anything but prolong things. Neither Greece or the EU or Barack Obama can answer either of these. Our Monastery of Miscellaneous Musings has a great snippet illustrating just this point. Dean uses it to make a different one, but the content of the speech leaves you no doubt that not only does President Obama not have an answer to these questions, he doesn't even know they should be asked. The failure to address these crucial, foundational questions blows my mind.

The more I read both theology and economics, the more I become convinced that we're living at the end of an age of denial.